We All Use A.I. Every Day (And I Can Prove It)

08.09.19

In the 1980s, we had no idea what artificial intelligence (A.I.) would be like – but we loved making movies about it. There was Arnold saying, “I’ll be back” in The Terminator…then becoming a young boy’s friendly sidekick in Terminator 2.

But in neither movie did Arnold Schwarzenegger’s character act much like a human. And in real life, for companies like OpenAI, the goal is to create A.I. that mimics human reasoning.

However, projects like OpenAIdon’t get much attention in the media. In a recent poll from Blumberg Capital, 58% of respondents said they were getting their info on A.I. from movies, TV and social media.

As for how people felt about A.I. – there was a big divide:

Source: Blumberg Capital poll (May-June 2019)

Perhaps that’s because people still think of A.I. as something that will happen in the future – not really part of daily life:

In a similar poll last year from a U.K. firm, Bristows, even fewer respondents said they’ve interacted with A.I. – just 15%!

Source: Bristows poll (July 2018)

But that number should be much higher – and here’s why:

When you ask people about specific applications of A.I., it turns out that almost everyone does, in fact, use A.I. in daily life. According to Pegasystems (a Boston-area software company), 84% of people use A.I. devices and services. The top applications were email spam filters, Google (GOOGL) search, and Apple’s (AAPL) Siri “personal assistant.”

Just about everyone uses email and Google these days. So that number could be far higher than 84%.

Artificial intelligence is all around us. So, it’s a trend we’re following closely (and cashing in on) at Growth Investor. Here are a few more examples that should sound familiar:

If you have an Android, Microsoft (MSFT) or Amazon (AMZN) device, there’s Google Assistant, Cortana and Alexa, respectively.

Netflix (NFLX) uses A.I. to recommend movies and TV shows for you.

Zillow (Z), the online real-estate listings, gives you a price “Zestimate” that’s based on A.I. Then, Zillow also uses A.I. to recommend similar houses.

TurboTax, Quickbooks and Mint – which all come from Intuit (INTU) – use A.I., too. That’s how QuickBooks Assistant can track your business expenses automatically. And they’re even working on a TurboTax app that can do your taxes automatically, too!

If you’ve ordered food from Domino’s Pizza (DPZ), Dunkin’ Donuts(DNKN), and even Denny’s (DENN), your order may have been taken by A.I. Chipotle Mexican Grill (CMG) just rolled out A.I. ordering, too…and the list goes on.

In this new world of A.I. everywhere, data becomes a hot commodity.

“Data is the New Oil”

As scientists find even more applications for artificial intelligence – from hospitals to retail to self-driving cars – it’s incredible to imagine how much data will be involved.

To create A.I. programs in the first place, tech companies must collect vast amounts of data on human decisions. Data is what powers every A.I. system. As one A.I. researcher from the University of South Florida puts it, “data is the new oil.”

Back in 2003, if investors believed that crude oil was set for a big price rise, they had a handful of different vehicles to choose from. They could buy speculative futures contracts… they could buy a small oil company exploring for oil in some remote jungle… or they could have bought shares in Core Laboratories (CLB).

Core did no drilling or exploration of its own. It provided technology to the companies who did. So, rather than take on the risk of owning shares in a company looking for oil in just a handful of places, a Core Laboratories investor could sleep soundly. They knew the company was collecting a steady stream of money from a huge number of oil companies.

As oil prices climbed from $30 per barrel in 2003 to $100 per barrel in 2008, Core’s customers had more money to spend on exploration. Core’s revenues surged… and CLB stock went from $5 per share to $60 per share… a gain in market value of 1,100%.

Now, picture an industry like Big Oil as a huge skyscraper with lots of offices. By buying stock in an individual oil company, it’s like having a key to one of those offices. By buying Core Laboratories, it’s like having a “Master Key” to all of them.

The A.I. “Master Key”

Core Laboratories was the Master Key to the 2000s oil boom. And here, the Master Key is the company that makes the “brain” that all A.I. software needs to function, spot patterns, and interpret data.

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